Clustering economies based on multiple criteria decision making techniques

Abstract

One of the primary concerns on many countries is to determine different important factors affecting economic growth. In this paper, we study some factors such as unemployment rate, inflation ratio, population growth, average annual income, etc to cluster different countries. The proposed model of this paper uses analytical hierarchy process (AHP) to prioritize the criteria and then uses a K-mean technique to cluster 59 countries based on the ranked criteria into four groups. The first group includes countries with high standards such as Germany and Japan. In the second cluster, there are some developing countries with relatively good economic growth such as Saudi Arabia and Iran. The third cluster belongs to countries with faster rates of growth compared with the countries located in the second group such as China, India and Mexico. Finally, the fourth cluster includes countries with relatively very low rates of growth such as Jordan, Mali, Niger, etc.

Keywords

• GDP growth
• Clustering
• MCDM
• AHP
• K-median